Tue, 30 Dec 2014
Gold-rated Dodge & Cox International picks stocks when they're out of favor and holds them for years--a strategy that has paid off for long-term investors.
Gregg Wolper: The Medalist of the Week is Dodge & Cox International Fund (DODFX). Now on the surface, this might look like a conservative offering. It has nine managers who work as a team. They've all been there for many, many years. They don't seek the limelight. You won't see them in the media very much. They tend not to leave Dodge & Cox. And they don't trade very much.
The fund's turnover rate is usually around 12% or 13% a year--very low. But it would be a mistake to think of this as a conservative fund, because these managers are willing to go out of the mainstream. For instance, they have many more emerging-markets stocks than most international funds do.
And they also will buy out-of-favor stocks; that's one of their main goals. And so, for instance, years ago when big pharmaceutical stocks were out of favor, people thought they would suffer because they had very few new drugs in their pipelines. There was competition from generics, and the health-care legislation was looming.
The managers went in and bought them low and held on for years, bought some more when there were doubts again, and that's worked well for them. They still own them.
Also, it's good to look at their top holding of a few years ago, Naspers, which is not that well known in United States. It's a South Africa-based Internet firm. [The managers] put 4% of the fund's assets into that one firm. It was the top holding for a while, and that worked out very well over the years.
That's not a conservative move. This fund is very large now. It's not as nimble as it used to be. But it still has great long-term prospects for investors who are willing to [ride out] the rough patches that do come occasionally with its out-of-favor style and stick with it long term. They should be very happy.